Correlation Between Ares Management and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Ares Management and Dow Jones at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ares Management and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Management and Dow Jones Industrial, you can compare the effects of market volatilities on Ares Management and Dow Jones and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ares Management with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Dow Jones.
Diversification Opportunities for Ares Management and Dow Jones
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ares and Dow is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Ares Management is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ares Management are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Ares Management i.e., Ares Management and Dow Jones go up and down completely randomly.
Pair Corralation between Ares Management and Dow Jones
Assuming the 90 days trading horizon Ares Management is expected to generate 2.43 times more return on investment than Dow Jones. However, Ares Management is 2.43 times more volatile than Dow Jones Industrial. It trades about 0.13 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.22 per unit of risk. If you would invest 10,679 in Ares Management on October 11, 2024 and sell it today you would earn a total of 439.00 from holding Ares Management or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Ares Management vs. Dow Jones Industrial
Performance |
| Timeline |
Ares Management and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Ares Management
Pair trading matchups for Ares Management
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Ares Management and Dow Jones
The main advantage of trading using opposite Ares Management and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Dow Jones can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dow Jones will offset losses from the drop in Dow Jones' long position.| Ares Management vs. Warner Music Group | Ares Management vs. CVS Health | Ares Management vs. Live Nation Entertainment, | Ares Management vs. Fidelity National Information |
| Dow Jones vs. Toro | Dow Jones vs. Foot Locker | Dow Jones vs. Abercrombie Fitch | Dow Jones vs. 51Talk Online Education |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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